November 2019 Wallace’s Farmer “MarketPlace Extra”

Much of the 2019 crop year has been a long, difficult slog.  An abnormally wet (and late) fall harvest in 2018 started things out behind schedule coming into 2019.  Then, an abnormally wet spring delayed typical growing season activities; which, in turn, backed up the start of harvest 2019 while folks waited for crops to finish and dry down.  And guess what?  As we finished September and started the month of October, it was raining again!  Do you sense a trend here?! Frustrations aren’t overflowing…yet.  But, with each washout day, people are becoming more concerned and worn out with all the rain! 

This lead-in might leave most people to conclude that the Iowa farmland market is on wobbly legs. To the contrary. The early fall farmland sales market across the State of Iowa has shown great resilience – and perhaps more strength than some market observers expected. The market is not lock-step consistent in every region, but overall the market is quite stable. Thus far this fall, premium quality farms have sold best – think well-drained, well-cared for productive soils, with a high % of tillable land. In this category, there have been more than a few sales that have easily exceeded $10,000 per acre at public auction. The 2nd and 3rd tier of land quality is where value gaps have been exposed. It seems that while prospective buyers are consistently willing to take a risk to buy a premium farm, they are not as willing to do so for a farm with flaws – think waterways or terraces, irregular field shapes, poor drainage, and lower CSR2 ratings. If you are selling a farm, it is really important to understand how a farm will fit into its local marketplace.

So, what’s supporting land values during this somewhat crazy year? There are several factors, not the least of which is anticipated average to average-plus crop production totals in 2019. The crop is not in the bin quite yet, and it’s not going to be a record, but Iowa production is also not going to be as poor as our farming neighbors to the east (IL, IN, OH), south (MO), and north/northwest (MN, SD). In addition to 2019 production, interest rates are meaningfully lower than they were a year ago, which is a very supportive factor in our land market. And lastly, the timing of the most recent MFP installment is a cash flow shot-in-the-arm at just the right time for many in agriculture. These payments cannot be relied on in the long-term, but they are significant when it comes to maintaining stable rents for 2020, among other things.

In summary, we’re currently a long way from concluding the 2019 growing season. Thus far, it’s been a tough year. And, in order to be well-positioned for 2020, we need Mother Nature to give us a break for another few weeks. But given the difficulty that Iowa agriculture has weathered this year, our farmland market is showing why it’s often considered the bellwether for all farmland markets.  

NORTHWEST

Pocahontas County:

164 +/- acres, located north of Havelock, recently sold at public auction for $7,100 per acre. The farm consisted of 147 +/- tillable acres with a CSR2 of 83.1, and equaled $95/CSR2 point on the tillable acres.

NORTH CENTRAL

Floyd County:

130 +/- acres, located near Greene, recently sold at public auction for $7,625 per acre. The farm consisted of 126 +/- tillable acres with a CSR2 of 85.1, and equaled $92/CSR2 point on the tillable acres.

NORTHEAST

Chickasaw County:

152 +/- acres, located southwest of Nashua, recently sold for $8,627 per acre. The farm consisted of 141 +/- tillable acres with a CSR2 of 90.1, and equaled $103/CSR2 point on the tillable acres.

WEST CENTRAL

Calhoun County:

100 +/- acres, located east of Lake City, recently sold at public auction for $9,600 per acre. The farm consisted of 100 +/- tillable acres with a CSR2 of 87, and equaled $110/CSR2 point on the tillable acres.

CENTRAL

Polk County:

81 +/- acres, located south of Madrid, recently sold at public auction for $11,500 per acre. The farm consisted of 81 +/- tillable acres with a CSR2 of 88.2, and equaled $130/CSR2 point on the tillable acres.

EAST CENTRAL

Cedar County:

136 +/- acres, located north of Stanwood, recently sold at public auction for $12,300 per acre. The farm consisted of 136 +/- tillable acres with a CSR2 of 91.4, and equaled $135/CSR2 point on the tillable acres.

SOUTHWEST

Cass County:

35 +/- acres, located southeast of Atlantic, recently sold at public auction for $7,600 per acre. The farm consisted of 34.5 +/- tillable acres with a CSR2 of 76.4, and equaled $101/CSR2 point on the tillable acres.

SOUTH CENTRAL

Appanoose County:                                                                    

43 +/- acres, located north of Centerville, recently sold at public auction for $5,300 per acre. The farm consisted of 42.5 +/- tillable acres with a CSR2 of 56.2, and equaled $95/CSR2 point on the tillable acres.

SOUTHEAST

Davis County:

65 +/- acres, located north of Bloomfield, recently sold at public auction for $6,700 per acre. The farm consisted of 61 +/- tillable acres with a CSR2 of 62.3, and equaled $114/CSR2 point on the tillable acres. Note: This farm had been operated organically.

Hertz Real Estate Services compiled this list, but not all sales were handled by Hertz. Call Hertz at 515-382-1500/800-593-5263 or visit www.Hertz.ag.